Chinese auto OEMs defy downward sales trend in Australia with right positioned products

Australia has been witnessing dwindled automotive sales since 2019 and the onset of COVID-19 further made things worse with highest year-on-year (y-o-y) decline of 48.5% witnessed in April 2020. However, four of the most prominent Chinese brands managed to report increase in sales even in these challenging times.

“Reportedly, year-to-date (YTD) sales of Chinese origin vehicles in Australia increased by 51.8% in October even though the overall vehicle sales YTD declined by 18.8% (Federal Chamber of Automotive Industries) compared to the prior year period. Presently, prominent Chinese vehicle manufacturers operating in Australia include MG Motors, Haval, Great Wall Motors and LDV, of which MG Motors accounts for the majority of the sales. Despite the existing political tension between the Australia and China and COVID-19-supressed market, all the four brands managed to gain market share with y-o-y increase in YTD 2020 sales of 67.8%, 84.1%, 26.1% and 22%, respectively.

“SUV segment holds majority share in Australia’s new vehicle sales. Affordability and the capability to offer better value preposition as compared to other Japanese/German brands are keeping the Chinese OEMs in good stead. In addition, Chinese vehicles are successfully transforming their hampered brand image by offering new products with enhanced design, safety and quality. Attractive offers and unlimited kilometers warranty are also luring customers to opt Chinese brands.

“Despite the fact that Chinese OEMs hold a small chunk of the market, the growth that these OEMs has made is something to cast an eye on. While on the flipside, volume-leaders Japanese OEMs such as Toyota are increasing their vehicle prices, which may certainly act in the favor of Chinese OEMs. Recovering economic activities, government initiatives to boost sales and more accessible finance options further offer opportunities to Chinese OEMs to increase their presence in the market.

Credits: Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData